The Australian Taxation Office (ATO) has warned of a growing amount of uncollected tax on alcohol products due to the rise in the illicit market.
This gap is expected to reach $1.23 billion, or 13.7 per cent of the total amount, in 2024 to 2025. The ATO said this is approximately a 0.4 per cent increase year-on-year. In 2015, the gap stood at 9.3 per cent.
An estimated $1.06 billion, or 91.8 per cent of the gap, is from the shadow economy, the ATO added. Illicit alcohol activities known to the ATO include unauthorised manufacturing, unpaid excise duty, product diversion, cross-border transactions and deliberate fraud or evasion.
“The alcohol tax gap includes excise and customs duties payable for beer, spirits and other excisable beverages,” the ATO explains. “It doesn’t include wine, which we estimate separately.”
“Like all excise gaps, when excise rates increase, the value of the gap in dollar terms will increase even if overall levels of compliance remain the same. It is for this reason that we focus on the tax gap percentage when considering the change in the gap between years.”
Alcohol excise rates in Australia are reviewed twice a year, with changes made in line with the consumer price index (CPI).
They were most recently changed on August 3, which saw taxes on spirits surpass $110 per litre of pure alcohol.
